Dana Milbank: That sinking feeling from CBO

For years, the White House has trotted out the nonpartisan Congressional Budget Office to show that Obamacare would cut health care costs and reduce deficits:

“CBO Confirms Families Will Save Money Under Health Reform.”

“CBO Update Shows Lower Costs for the New Health Care Law.”

“CBO Confirms: The Health Care Law Reduces the Deficit.”

Live by the sword, die by the sword, the Bible tells us. In Washington, it’s slightly different: Live by the CBO, die by the CBO.

The congressional number-crunchers, perhaps the capital’s closest thing to a neutral referee, came out with a new report Tuesday, and it wasn’t pretty for Obamacare. The CBO predicted the law would have a “substantially larger” impact on the labor market than it had previously expected: The law would reduce the workforce in 2021 by the equivalent of 2.3 million full-time workers, well more than the 800,000 originally anticipated. This will inevitably be a drag on economic growth, as more people decide government handouts are more attractive than working more and paying higher taxes.

This is grim news for the White House and for Democrats on the ballot in November. This independent arbiter, long embraced by the White House, has validated a core complaint of the Affordable Care Act’s critics: that it will discourage work and become an ungainly entitlement. Disputing Republicans’ charges is much easier than refuting the federal government’s official scorekeepers.

White House officials rushed to dispute the referee’s call — arguing, somewhat contradictorily, that the finding was both flawed and really good news if interpreted properly.

Press secretary Jay Carney quickly issued a statement saying that the CBO report was, by its own admission, “incomplete” and “does not take into account” some favorable effects of the law.

Carney postponed his daily press briefing, then arrived with Jason Furman, head of the Council of Economic Advisers, who argued that the Affordable Care Act couldn’t possibly be a job killer because 8.1 million jobs had been created since it became law. This is true, but irrelevant to the CBO finding.

Meanwhile, Gene Sperling, Obama’s top economic policy adviser, walked to the White House lawn and told CNN’s Wolf Blitzer that he rejected the finding. “When you have two parents and they’re both working full time to provide health care and they don’t feel they’re there to do homework with their kids and this allows one of [them] to work a little less because they have health care, that’s not costing jobs,” Sperling argued.

Sounds nice, except the CBO said its more pessimistic workforce view had been shaped by recent studies, “in particular” those looking at “expansions or contractions in Medicaid eligibility for childless adults.” In general, the CBO explained, phasing out subsidies to buy health insurance when income rises “effectively raises people’s marginal tax rates ... thus discouraging work.”

There was some good news about Obamacare (and about shrinking deficits) in the report: Premiums are lower than expected, and there “is no compelling evidence” that employers are shifting to part-time jobs in response to the law. The law will give health insurance to an additional 13 million people this year and 25 million in 2016 and beyond.